In a statement, 21st Century Fox said it made a formal offer to Time Warner, parent of HBO, Warner Bros. and Turner Broadcasting last month but that Time Warner's board "declined to pursue our proposal" and "we are currently not in any discussions."

Time Warner's board of directors said the offer was "not in the best interests of Time Warner or its stockholders to accept the proposal or to pursue any discussions with 21st Century Fox." The board added that it is "confident that continuing to execute its strategic plan will create significantly more value for the company and its stockholders and is superior to any proposal that 21st Century Fox is in a position to offer."

Speculation about 21st Century Fox, whose assets include Fox Broadcasting, the movie studio 20th Century Fox and cable channels Fox News and FX, has been rampant for the last two months. A senior Time Warner executive had been telling other top executives in the company that Murdoch was interested in an acquisition, people close to the company said.

Wall Street analysts soon also jumped on the gossip with reports about the rationale for such a merger and whether combining two huge entertainment giants could get through Washington lawmakers and regulators.

Motivating 21st Century Fox's desire to acquire Time Warner is the rapid consolidation among the distributors that 21st Century Fox counts on to deliver its content. Comcast Corp. is in the process of acquiring Time Warner Cable and AT&T is buying satellite broadcaster DirecTV.

As distributors merge, content providers such as 21st Century Fox and Time Warner fear that they will lose leverage in negotaition fees for carriage of their channels.

Additional negotiating clout was not the only motivation for 21st Century Fox. It has long wanted a strong pay-TV channel such as Time Warner's HBO. Also, Warner Bros. is the biggest movie and television studio, and combining it with 20th Century Fox's television and movie units would create a content juggernaut.

But such a merger would have faced intense regulatory scrutiny even though technically there are few Federal Communications Commission rules that could have derailed the deal.

For starters, 21st Century Fox owns Fox News and Time Warner owns CNN. The idea of the nation's two biggest cable news outlets being under the same roof would have probably been a tough sell to Capitol Hill as well as to advertisers. A sale of CNN would likely have been required.

Also, the sheer volume of content and networks that a combined 21st Century Fox and Time Warner would own and the power that would give them over the production community would have raised serious antitrust issues.

Talk of Time Warner being a potential acquisition target has heated up in recent years as the company has shed assets to focus exclusively on movies and TV. It recently completed a spinoff of its Time Inc. publishing unit, which was seen as a drag on the company.

News of 21st Century Fox's offer was first reported by the New York Times.